Report: AMD’s 3Q revenue share slipped, Intel gained ground

Third quarter microprocessor revenue numbers are in, and AMD appears to have …

AMD's third quarter results from two weeks ago were tremendously improved from what we saw back in July, but iSuppli's data indicate that the company's overall share of microprocessor revenues dropped from 13.9 percent in the third quarter of 2007 to 12.1 percent in the third quarter of 2008. Intel picked up another 1.7 percent of total market revenue over the same period, bringing that company's share of the pie to 80.4 percent.

Quarterly results were a bit different. Both companies posted small gains from the second quarter to the third quarter, with AMD's revenue share rising by 0.1 percent and Intel's up by 0.3 percent. The report implies that Intel stole revenue share from AMD based on the strength of its mobile products, while AMD took a bit of share from various undefined "other" vendors. It's not clear how Atom plays into this scenario; Atom-powered netbooks have been flying off the shelves, but the only other company with an Atom competitor is VIA. One would therefore expect Intel to be the company picking up a bit of market share from the "other" segment, but iSupplithinks otherwise.

AMD in the third and fourth quarters

I'd like to turn from the iSuppli report and talk about some of the other AMD-centric information that has come out in the past few weeks. The company released its third quarter results (PDF) on October 16, and as I previously stated, the numbers were much stronger than what we saw in Q2. The company's net revenue for the quarter was $1.78 billion, up 31 percent from $1.35 billion in the second quarter. Year-to-date revenue is up 14.6 percent, from ~$4 billion in 2007 to $4.58 billion in 2008. Gross margins were down one percent compared to second quarter, but, at 51 percent, are significantly higher than the 41 percent from the same period last year.

AMD reported a net loss of $67 million on the quarter, but this was caused by a $108 billion loss in discontinued operations, rather than any weakness in the company's microprocessor or GPU divisions. Of more importance to investors (and the successful execution of its Asset Smart strategy) is the fact that AMD managed to return to operational profitability, with an operational income of $131 million. That's a tremendous improvement over both Q2 2008 and Q3 2007, when the company posted operational losses of $143 million and $181 million dollars. New profits from the GPU division contributed substantially to the turnaround, rising 55.2 percent between the second and third quarters of this year (from $248 to $385 million), but the CPU division improved its revenue as well. Two weeks ago, AMD reported net microprocessor revenue of $1.39 billion, up 26 percent from Q2's $1.1 billion.

Neither AMD nor Intel are being overly bullish at the moment. Both companies are hedging their predictions over concern for our current economic situation, but AMD is currently on track for a relatively strong finish in the fourth quarter. Top-to-bottom ATI HD 4000 solutions are now available and compete well against NVIDIA parts at all price points, while the company has stated it will begin shipping Shanghai-based servers for revenue before the end of 2008. A single decent quarter doesn't mean that all is suddenly hunky-dory over at 1 AMD Place, but the trend line is definitely pointing upwards.

One final bit of business. Just two days ago, AMD announced that it had completed the sale of its DTV (Digital Television) processor business to Broadcom for $141.5 million in cash. That's down about $50 million from the $192.8 million price that was originally announced back in August, but it's still a healthy chunk of change to have in one's pocket. If I've read the 8K filing correctly (PDF), we'll see this income reflected at the end of the fourth quarter. I'm betting AMD will use the cash to either retire some debt (or renegotiate it on more favorable terms), or to fund its own foundry spinoff. Alternatively, it might just sit on the money—after bleeding red for multiple quarters, Sunnyvale could use a little green in the bank.